Comprehensive EUR/USD Analysis for October 10, 2023

At Ultima Markets, we are dedicated to providing you with insightful market analysis to help you make informed trading decisions.

In today’s edition, we focus on the EUR/USD currency pair, delving into both fundamental and technical factors that may impact its performance in October 2023.

Key Takeaways

1. 1. Rising U.S. Treasury Yields: The recent surge in long-term U.S. Treasury yields has led to a substantial increase in borrowing costs. This development has garnered attention from influential figures in the financial landscape, including hawkish Logan and Fed Vice Chairman Jefferson.
   
2. 2. Fed’s Potential Pivot: Acknowledgments from Logan and Jefferson hint at a potential shift in the Federal Reserve’s stance on interest rate hikes. This shift could diverge from previous expectations, impacting the EUR/USD currency pair.
   
3. 3. Weakness in the U.S. Dollar: Notably, the U.S. dollar index is displaying signs of weakness in the upcoming week. The primary driver behind this trend remains the rising U.S. bond yields.

Fundamentals Impacting EUR/USD

The recent surge in long-term U.S. Treasury yields has substantially increased borrowing costs, reverberating throughout the financial markets. This development has garnered attention from key figures in the financial world, including the hawkish Logan and Fed Vice Chairman Jefferson.

Their acknowledgment of the impact of rising U.S. bond yields on financial conditions suggests a potential shift in the Federal Reserve’s stance on interest rate hikes. As a result, the U.S. dollar index is poised for a potentially weak trend in the coming week.

Technical Analysis

Daily Chart Insights

( Daily chart of EUR/USD, source: Ultima Markets MT4) 

Turning our attention to the daily chart, we observe the stochastic oscillator’s fast line crossing the slow line. However, it’s crucial to note that this indicator is approaching the 50 midline, while the market is in close proximity to the 17-day moving average.

These technical signals suggest the possibility of a market decline today. However, entering long positions should be contingent on a decisive market breakthrough, followed by close monitoring of retracement prices.

4-Hour Chart Analysis

(4-hour chart of EUR/USD, source: Ultima Markets MT4) 

On the 4-hour chart, there are indications of a head-and-shoulders bottom formation, though the price has not yet touched the neckline resistance area.

This scenario suggests the potential for a market correction in the near future.

1-Hour Chart Insights

(1-hour chart of EUR/USD, source: Ultima Markets MT4) 

Referencing the 1-hour chart, Ultima Markets’ pivot indicator designates the central price of the day as 1.05565. To navigate these levels effectively:

• Bullish sentiment prevails above 1.05565, with the first target at 1.05937 and the second target at 1.06114.

• On the other hand, a bearish stance should be taken below 1.05565, targeting 1.05392 as the first level and 1.05019 as the second.

Conclusion

In summary, the EUR/USD market in October 2023 is subject to a dynamic interplay of fundamental and technical factors.

Rising U.S. Treasury yields and the potential shift in the Federal Reserve’s stance are fundamental drivers, while technical indicators suggest the possibility of a market decline and the formation of a head-and-shoulders pattern.

Traders and investors are advised to exercise vigilance and closely monitor these developments, considering both fundamental and technical aspects.

Staying well-informed and adapting strategies accordingly is crucial for navigating the ever-evolving landscape of currency trading effectively.

For personalized investment guidance, consult our team of experts at Ultima Markets.

---

Disclaimer 

Comments, news, research, analysis, prices and other information contained in this article can only be regarded as general market information, provided only to help readers understand the market situation, and do not constitute investment advice. Ultima Markets will not be responsible for any loss or loss (including but not limited to any loss of profits) that may arise from the direct or indirect use or reliance on such information.